Global Macro Trading Journal

[Deuteronomy_24_7]

Gosh, he should hire you as a consultant to his trade desk. How much do you charge?

 

[Daal]

FBI concludes Hillary investigation saying no crime, ES up +27 points. Damn

 

[CH1973]

The theory behind going 100% in stocks when going in a sabbatical is that because I'm taking less risk in the active trading side, I can take more risk in the investing side
But on the other hand, as an active trader I'm not exposed to have a big drawdown when people pull back from drinking the CB kool aid. I'm flat most nights. As an investor, if the S&P gets hammered, I'm likely too as well

But on the other, other hand, BRKB seems limited in its downside...

A positive risk management note in this subject is the fact that, this summer, Berkshire pilled up their biggest mountain of cash. In theory they should have a lower Beta compared to the SP if equities continue to moves higher, but will be able to benefit significantly in any sell off.

http://www.denverpost.com/2016/10/11/warren-buffett-extra-cash-can-invest-it/

 

[Daal]

A positive risk management note in this subject is the fact that, this summer, Berkshire pilled up their biggest mountain of cash. In theory they should have a lower Beta compared to the SP if equities continue to moves higher, but will be able to benefit significantly in any sell off.

http://www.denverpost.com/2016/10/11/warren-buffett-extra-cash-can-invest-it/

This is true, however, as a counter-point to that is the fact that BRKB got more leverage. I believe Buffett is leveraged around 1.4-1.6 to 1 (combination of float, deferred tax liabilities and bond debt), and the companies he owns, also have debt. A SPY position only has that corporate debt underneath. The cash does bring the net leverage down somewhat

Overall, I believe that the valuation+buybacks+buffettlogists buying is what can prevent a significant drop in BRKB as compared to the S&P500, which pretty much only has the Fed to prevent it from dropping

 

[Daal]

This BRKB vs SPY situation is interesting because so much of what BRK owns are private companies that are kept in the books at the acquisition cost and its not subject to mark to market. In 2008, stocks collapsed like 30-40%, yet BRKB only reported a ~10% book value loss. BRKB stock was down a lot more than that but there is this interesting dynamic now between the book value, the buybacks now that did not exist in all the other 50% drops in BRKB stock
Because of that, big drops look to me more unlikely and any significant drops are likely to be covered faster

 

[Daal]

http://thereformedbroker.com/2016/1...vestor/?utm_source=dlvr.it&utm_medium=twitter

good article

 

[Martinghoul]

Ouch...

 

[Daal]

Ouch...

you got anything to add to the discussion other than to throw rocks when the short-term price favors your previous opinion?

 

[Martinghoul]

you got anything to add to the discussion other than to throw rocks when the short-term price favors your previous opinion?

I think I have already spoken enough on the subject. You will undoubtedly note that my opinion has not fluctuated, regardless of the short-term price swings (including the current one).

 

[Daal]

I think I have already spoken enough on the subject. You will undoubtedly note that my opinion has not fluctuated, regardless of the short-term price swings (including the current one).

as I understand, your opinion is that you are 100% right about the company and therefore you can dismiss any scenario where you are wrong. its also the opinion of those who are short right now